The regulation of eukaryotic genes depends upon a complex series of events that include the addition and removal of post-translational histone modifications, which play a central role in gene activation. These biochemical events are orchestrated by large multiprotein complexes containing histone-modifying enzymes, along with other subunits that control enzyme activity, recognize chromatin substrates, and associate with components of the transcriptional and RNA processing machinery. While great advances in structural studies of RNA polymerase, basal transcription factors and DNA-binding proteins have contributed important mechanistic insights into eukaryotic transcription, an understanding of how coactivator complexes function in this process has lagged due to a lack of structural information. The long-term goal of this project is to uncover in molecular detail how the different subunits in coactivator complexes work in concert to modify their correct chromatin targets and interact with other components of the transcription apparatus. This grant proposal centers on the SAGA coactivator complex, which acetylates histone tails and deubiquitinates histone H2B, and plays a role in both transcription initiation and elongation. The 21 proteins that comprise the SAGA complex are widely conserved from yeast to humans, and are organized into distinct sub-modules. The deubiquitinating (DUB) module, which removes monoubiquitin from Lys123 of histone H2B, contains four proteins: Ubp8, Sus1, Sgf11, and Sgf73. Although Ubp8 contains a ubiquitin hydrolase domain, the other three DUB subunits must all bind to Ubp8 to activate its enzymatic activity. It is not understood how the association of all four proteins potentiates the deubiquitinating activity, nor is it known how this enzyme complex is targeted to its histone substrate. The recent high-resolution structure of Ubp8/Sgf11/Sus1/Sgf73 bound to ubiquitin aldehyde revealed an unusual intertwined arrangement of DUB module subunits and now sets the stage for detailed investigations into enzyme activation and targeting to histones. Aim 1 addresses how Ubp8 is activated by the other DUB subunits. A combination of biochemical and x-ray crystallographic studies will be used to test specific hypotheses regarding the contribution of each subunit to the correct orientation of catalytic residues in Ubp8 and to ubiquitin binding. Aim 2 addresses how the DUB module is targeted to nucleosomal substrates through specific interactions with either H2A/H2B dimers or with nucleosomal DNA. We will take advantage of new methods to generate chemically ubiquitinated histones to carry out quantitative studies in a defined, homogeneous system. Assays of enzyme kinetics, structure determination and in vivo assays will be used to identify the determinants in both the SAGA DUB module and in nucleosomes that are responsible for proper substrate recognition. The findings that emerge from these studies will be of direct relevance to the human SAGA complex, whose subunits and composition is highly similar to the yeast complex. Since defects in a human DUB module protein are directly implicated in Spinocerebellar Ataxia type 7 and the human Ubp8 homologue, Usp22, is a cancer stem cell marker, our studies will provide immediate insights into how DUB dysfunction gives rise to human disease.